Demand Credit-Freeze Rights!

Are you aware that 22 states in this "United" States of America have laws that offer a much greater level of protection from credit identity-theft scams for their citizens than the other 28 states do? Yes, if you happen to be lucky enough to live in California or one of the other 21 states with consumer-friendly legislation that allows you to "freeze" your credit files at the major credit-authorization/scoring firms (TransUnion, Experian, Equifax), you have an extra layer of protection against the rampant identity-theft scams than persons in other States.

But, perhaps not for long! Congressman Steve LaTourette (R-OH), is trying his darndest at a Federal level not to offer this extra protection to all of us, but instead to remove that extra layer of protection certain States offer. He has introduced legislation that, if enacted, would reverse the efforts of over 22 State Attorney Generals who have sided with consumers in the battle against the massive problem of identity theft.

In congressman LaTourette’s bill, consumers would only be allowed to freeze access to their credit information if they had filed a police report indicating they had already become an identity theft victim. That's right, he wants to make a Federal law that says only after being victimized could you freeze access to your credit, and not before. Why lock your door -- let someone steal everything and then lock it It sounds insane because it is insane!
And what the heck are the banks getting out of your deal anyhow? Is obviously-fake / stolen-credit business still "OK" to banks, just so they can show extra "business" on their bottom lines or what? I can't understand this one bit -- it SEEMS so insane that banks would want this law either (perhaps someone can explain this to me).

Anyone with even half a brain can see the obvious ignorance and insanity of such lock-the-door-after-theft-occurs logic. Oh, but wait, we forgot the powerful lobby group of the American Banker’s Association - the most vocal supporter of LaTourette’s bill! Ignore what every average citizen wants... just do what the lobby (read: money) wants. This kind of thing is a sick abuse of power, and nothing short of the typical audacity of our elected leaders that supposedly work for "us, the people", but seem to constantly ignore the overwhelming voice of the populace in favor of the voice of power and money exhibited by lobbyists in our nation's capital. This blatant disregard of our rights to information security and protection must be dealt with. Voice your opinion, and if/when the opportunity arises, vote this turncoat out of office! (hopefully the next elected "representative of the people" will actually listen to the people!).

You know what Mr. LaTourette: if your bill becomes law, and I am not able to freeze my credit information when I otherwise would, and someone takes advantage of your open-credit-door policy for crooks, I and everyone else affected by your obvious disregard of our privacy wishes may just ban together and sue you for neglecting your fiduciary responsibility to uphold the will of the people. Something needs to change: start listening to the people at large, and not just the lobbyists. Only an idiot could argue that your approach to "privacy" is at all effective in identity and credit-theft protections.

Why don't PCs have built in battery backup?

I poked around the web looking for a PC (not a notebook) case or power supply that comes with its own "built in UPS" or "built in batter backup" of sorts. I own various UPS (Uninterruptible Power Supply) devices, and I find myself looking at them thinking - why?

Yes, I know the obvious reasons why you should use an UPS (in case power goes out, or a surge or brownout occurs), but the "why" that I asked myself was why don't the PCs include a *small* battery unit internally to at least handle a few minutes of uptime and protect against surges/brownouts without the need for an external device sitting there taking up floor space. It seems to me it would be much more efficient if a rechargeable batter was placed inline with the PC's power-supply (on the outgoing, DC side of things) where if AC power was dropped, it would provide the necessary 12V and 5v (or whatever other low voltage requirements) power to the computer. In addition, a built-in unit like that could easily interact with the motherboard and "inform" the computer (and/or OS) that A/C power was compromised.

With today's Lithium-Ion batteries (like notebooks use) the battery unit could be quite small and easily power the computer for a while. Or, even less expensive lead-acid batteries (like UPS's mainly use) could be incorporated.

I'd also go as far as to say that PC manufacturers could then get together with external component makers (like Flat-Panel LCD makers), to work on a "standard" for low-voltage external device connection that could also make short-term use of the PC's proposed internal battery. Have you ever noticed all those AC-to-DC adapters for your LCDs, some external hard-drives and CD/DVD-ROMS, etc? Seems ridiculous to me. I know that USB allows for some very low-current connections, but there is probably a good case to be made for higher-powered external devices to have a way to plug into my (theoretical) PC with built-in-backup-power.

The main thing would be to just have enough time for the system to perform an orderly shutdown if needed. I think there have been manufacturers of the PC power supply that I envision, though I could not find such a thing on the web.

Just thinking as I write my technology blog entries again, and hoping for improvements in the PC/computer world.

VMware for Apple Intel Mac OS-X coming!

VMware for Apple OSX has been announced! This is great news for anyone that has an Intel-based Apple Mac machine that wants to run Apple OS-X as their host operating system and still have the ability to run other operating system like Microsoft Windows, Linux, Netware, Solaris, and any other supported OS's.

I have been contemplating the Mac OS-X platform for sometime, but I need Windows for some of my software development activities (Borland Delphi in particular, and MS SQL Server enterprise manager). This opens a new world of possibility to me. I have had the ability to run Windows under Linux already (using VMware Workstation and/or Player products), but the Apple system prospects were not so clear. I didn't want an Apple just to "play" with it, though I'd consider it much more with the ability to run VMware on it.

So, the product announcement says that beta versions will be out later this year. I'll keep an eye on it, and see what OS-X 10.5 has to offer as well. The only detractor left is the whole pricing of Apple boxes (a premium over commoditized PCs to say the least).

What I still did not notice (perhaps I am just not seeing it anywhere) is the ability to do the reverse -- run OS-X virtual machine on my PC! Now, THAT would entice me into buying a copy of OS-X 10.5 as soon as it was available - just for kicks.

War on the Middle Class? Lou Dobbs tells only part of the story.

For all you Lou Dobbs fans, I want to discuss his ongoing series about the "War on the Middle Class". Let me start by stating that I find Lou Dobbs to be somewhat intelligent, eloquent, and well informed on many topics. His efforts to maintain a focus on border security are admirable. And, his Exporting America dialog is thought provoking and something we all need to give more consideration to.  [update: his true colors eventually showed with his "birther" conspiracy theory crap and other issues, prior to his premature death]

But, I really think Lou Dobbs needs to expand the breadth of his investigation with regard to this purported war on the middle class he so often speaks of. For brevity, I will refer to the "war on the middle class" as just "war-mc" throughout. Tonight's war-mc segment discussed how the housing downturn was yet another thing responsible for putting the squeeze on America's middle-class, citing various statistics about how:

• 40% of mortgages now are zero-down or other "exotic" types
• inventories of homes on the market are rising
• 1/2 a trillion in ARMs will adjust this year
• 700 billion in ARMs will adjust next year
  
• people are facing huge increases in mortgage payments at the same time they are being squeezed by energy costs
• (and, a common theme not necessarily mentioned today is how wages have stagnated)

All of these items may very well be fact. But, how is this representative of a war-mc? I am likely to upset quite a few persons that would like to have everyone believe that their woes are all due to this supposed war on the middle class, but I must put forth another side to be considered -- I believe that a significant part of this war-mc is a self-inflicted war.

Why self-inflicted? Because so many of the issues Lou Dobbs talks about result from our own actions ("our" being the middle class generally). Though I can not fully develop my reasoning in a single blog article (it would take a book), here are some of my reasons for calling this war-mc "self inflicted":

• Mortgages. It is this simple: only you are responsible for taking on more debt that you can service, for believing that interest rates would never rise again, and to think that house prices were taking an endless upward climb that would always allow you to increase your home value and equity with little or zero effort.
• Mortgages/housing: from what I see, the "middle class" is the driving force behind the housing bubble. It's the middle class that banks and lending institutions have targeted with excessively easy of access to debt. Not a day goes by without another offer for a credit-card, home-equity loan, or the likes for most of the middle class. And, the middle class bought into it all hook, line, and sinker, taking out as large of loan as possible, pushing their finances to the edge, and acquiring the biggest and most extravagant house they could possibly "afford" (afford being a term that has lost all meaning these days - it now simply means how much a bank will let them borrow... little to do with truly afford). The belief that home prices would constantly climb has made many feel they could do no wrong with such a move. Well, this all worked as long as the Federal Reserve made money so cheap (to borrow) that the house of cards kept going higher.
  
• Housing add-ons: the large houses (and loans) are usually just the tip of the iceberg. With those homes come all sorts of products and services. The larger the house, the larger your costs - be it lawn service, landscaping, watering, heating, cooling, or simply the property taxes on that thing! Yes, one excess begets others. And, per the rules of supply and demand, the larger draw on energy resources to heat and cool those extra square-feet raises energy costs for everyone; many of the resources used (in larger amounts) to build and maintain a larger home are petroleum based too (roofing, vinyl siding, and much more), all increasing demand for limited resources.
  
• Automobiles: you have to get to that fancy house in the suburbs, and you certainly do not want to rely on public transportation (which, is of course harder to even find out in the burbs). Instead, you have to have a veritable fleet of cars to go along with that house. These cars can not be too old, or they dare not fit your image (or match your house). Instead of driving 10 year old affordable vehicles, the norm is more like 4 years or newer. Those cars bring along a host of bills: insurance, fuel, tires and consumables. Note to all: all the extra demand for fuel raises fuel prices further.
  
• Credit-Card Debt: I think everyone knows the story on this -- simply put, it is out of control.
  

Whether you want to admit it or not, many of the costs that are "waging war" on the middle-class are a matter of choice. That is what people like to forget, ignore, or make excuses in order to evade. It is your choice to purchase a 4000 square foot home, a Hummer, a Harley and all your other toys and niceties. And, even if you are nowhere near that level of expense, but still stretched to the edge, there are still likely to be many choices that you have made that led to you feeling like there is a war-mc.

We all have the worst example of all to follow when it comes to living beyond our means: our own government. They spend money far beyond what they have, and appear to have little to no concern about the long-term ramifications of ballooning debt and related obligations. The Federal Reserve, during the last recession, saw that the fastest way to make the economy look wonderful and robust was to enable the middle-class to take on excessive amounts of debt (just like our government) at low interest rates and allow a housing bubble to take shape -- and pull us out of a recession. Once could argue that it was a cure, but I believe a significant amount of this emergence from recession was simply a postponement of the inevitable adjustment that must occur when the realization that debt funding by overseas investors must eventually hit a ceiling. Until we ourselves save and control spending, we will be at the mercy of others.

I was raised in an environment where money was tight, and things had to be very strictly budgeted for. Debt was something to be avoided, as it makes you work to service it, and it introduces excess and avoidable fear when times are rough. Debt has its place in our economy for certain -- without it, growth would stagnate. But, debt abuse and easy debt has crept in and taken over for anything that I would consider sane and safe levels - for individuals, business, and government.

For those of you not already mired in excessive debt, please, think twice (and many more times) prior to entering into further debt. A simple solution is to live beneath your means (especially beneath the level of debt your income will allow you to get in today's age of easy loans). You do not have to do it forever; but, do it long enough to acquire solid savings skills and debt-avoidance skills. Then, you will not have to be part of those that interpret every negative bit of economic news (like the housing downturn) as a "war against the middle class"; instead you will see it for what it is (primarily), a war against those who chose to put themselves in the line of fire.

As a close, I must acknowledge the fact that there are a significant number of expenses that could be considered part of a war-mc. These expenses will nearly always exhibit some commonality in that: they are difficult to avoid; are for services/products you can not live without (and I do not mean your cell-phone); there are few supplier options (leading to easy and widespread price-fixing opportunity); their average rate of annual increases will far outpace inflation as a whole. Some examples include: health care and prescription drugs, food, other insurances, fees (e.g., banking fees), and taxes (or other government fees). I did not mention energy simply for the fact that we consumers control demand (though we do not exercise that control very well) for the most part.

Currency Hedging with American Depository Receipts (ADRs)

For those of you who have already read my May, 2006 posting about Investing in ADR (American Depository Receipt) Stocks, you may have been able to make impressive investment returns, for two reasons. If you watched both the currency-rates and the stock prices during this time and jumped in when the stock market had a mini correction that bottomed out early-mid June:

• the stock markets, both here and abroad, performed rather well since that bottom;
• the United States Dollar (USD) tanked against the British Pound (GBP) and other currencies worldwide during that same period.

The overall stock market move is a bit irrelevant to the ADR thing, but the second ROI reason is all about currency fluctuations and how they affect your ADR share-price returns.

A couple of London Stock Exchange stocks that have ADRs here in the USA that I regularly follow are Barclays PLC and HSBC Bank (which I used as an example in the 5/13/06 article). Let's say you timed things very well and got into each at roughly their bottom in mid-June, and examine what your returns would be and why:

• Barclays (ADR ticker: BCS) - on the London Exchange, it was trading at 586 Pence at its low, and closed today at 653.5 Pence. Return on the London market: 11.52% . . . Impressive, but, the BCS ADR during the same time hit a $43.23 bottom, and a $49.64 close today, or a whopping 14.83% return, which is quite nice, especially considering we are talking about large blue-chip type banks that roll off a healthy 3-4% dividend! Your ADR returned an extra 3.3% on your investment during the same period! The difference in returns reflects the tanking USD during this period.
• HSBC (ADR ticker: HBC) - on the London Exchange, it was trading at 913 Pence at its low, and closed today at 951.5 Pence. Return on the London market: 4.22% ... and, the HSBC ADR during the same time hit a $84.34 bottom, and a $90.35 close today, or a 7.126% return, which is darn solid too for such a short timeframe. Your ADR returned an extra 2.9% on your investment during the same period! That extra return reflects the substantial drop in the purchasing power of the USD during this period.

Now, you may be asking why both stocks did not return the same 3.3% "extra" due to currency swings: simple, one stock hit its low on a different (later) date than the other, and the currency exchange rates had already changed some.

So, keeping these examples in mind, there can be opportunity to hedge against the falling dollar by purchasing American Depository Receipts (ADR) stocks. This is not as direct as simply playing the currency market on a ForEx trading platform or such, but it is probably less likely to cause you to lose all your money doing risky currency-swing trades. Do some research, and consider the options that are available. There are ADRs for UK stocks as well as German, Japanese, Israeli, and many other firms.

Keep in mind, as I pointed out in my prior article, you can play this swing both directions. If the US Dollar strengthens greatly while you hold an ADR, you can just as quickly see the multiplier working against you. If you want more information, read that first posting of mine. If you still need more, let me know and I will try to dive deeping into investing in foreign stocks in this manner, especially in order to hedge against any devaluation in the US currency.

Increasing prices to remain competitive?

According to the dictionary, competition (in business) is referred to as "Rivalry between two or more businesses striving for the same customer or market." Now, common sense dictates that this rivalry for the customer would be by offering a better service / product, or the same service / product for less money.

Well, you and I understand this, but do the companies that are competing for us consumers understand it? What got me started on this blog were a couple of rate increases from our cable TV company over the prior year or two; in particular, the small plain white piece of paper with a list of old and new prices, plus a quick explanation of why ". . . in order to remain competitive, we are raising our rates . . ." Gee, excuse me??! Did I hear right? You are raising prices in order to remain competitive?

Only marketing "experts" could try to put such a spin on increasing the price of a commodity such as cable TV and feel OK about telling us how it is all about remaining competitive. I guess that sounds better than all of the more likely real reasons for an increase, such as:

• We know you have limited choice in who provides this service to you, so we do not have to be competitive at all, since there is barely anything left that could truly be called competition; (most likely imho)
  
• We have aging infrastructure that needs updated or you may leave for a competitor - and, we have not planned accordingly and now need funds to pay for it; (at least this may have been somewhat honest);
• Our debt burden is now your problem -- sorry, but we grew too quickly using debt to make us look like a fast growing, high flying company that is best for everyone, at least long enough to push others out of the market; (common place)
  
• Our top directors have taken advantage of the company through excessive pay, stock options, and the likes, and well, you get to pay for their mistakes and greed; (in this case, their is truth to this scenario, since the company we have is Adelphia, and we all know about how the founding family got in a bit of a legal jam for fraud).
• We do not care about being competitive on the price offered to you, our customer, but we do know we want our stock price, P/E ratio, and the likes to be competitive and need to increase cash flow to do so (oh, and some bonuses will certainly have to be paid to top management as soon as this plan works).
  

Regardless of the real reason for price increases, please keep in mind, you do not raise prices in order to remain competitive - you do so because you can, because a competitor has recently raised the price on a similar service, or perhaps your raw material and labor costs have increased. But, do not consider the consumer ignorant enough to accept a price increase as a means of competition! Then again, maybe I need to increase my prices to remain competitive? Hmmm... sounding a bit better now. heh.

Income is NOT Wealth

This posting goes along with some other posts I have done about saving money in order to invest and plan for the future. America as a whole needs extra encouragement to consider saving money, and I hope this posting helps motivate you.
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Perhaps you make a great income in your current job. Well then, you must be wealthy! Wrong! Granted, you are good at making money, but unless you are equally good at being an accumulator of wealth (i.e. Savings!), you will forever remain income-rich and wealth-poor.

Perhaps you see your friends with new cars, homes, flashy clothes and accessories, and so on, and you presume them to be wealthy or rich. Well, unless they have inherited a large sum of money to begin with, or have been prodigious accumulators of wealth prior to spending money on these easily observed signs of spent cash, chances are they are not wealthy at all. First of all, most self-made wealthy people don't spend money on all sorts of flashy things - it goes against their entire formula for having accumulated their wealth to begin with, and furthermore, it would jeopardize their ability to remain wealthy. Chances are, the persons you perceive as wealthy are either (or both) good at producing income or even better at using credit, and their appearance of wealth is just that - appearance. As soon as their income slows or they can no longer service the credit they've taken on, it's all over for them; this may take many years to catch up with them, and if they are one of the lucky ones, they will maintain or increase their incomes over the years to keep up with, or further expand, their spending and perceived wealth.

Even those celebrities with all their flash and "Bling" are primarily dependent upon their income and not wealth. Certainly there are some famous people with plenty of wealth, but many of the "star of the moment" type have little going for them beyond their income, since many can not imagine being anything but famous and rich once the cash has started flowing, and likewise they don't prepare for the time where it no longer runs like water. And, many end up with very little in the end - consider famed performer MC Hammer, who even though making $33,000,000 in a year, was able to outspend his income with the help of his 40+ member entourage (for this any many more examples, see: http://www.legalzoom.com/articles/article_content/article5466.html. What you see in the actions of these very public displays of income and cash-disposal is not how the average wealthy person lives, since most self-made wealthy persons know what it takes to accumulate wealth to begin with, and do not want to jeopardize their way of life so hard earned.

I know it will be very difficult to live a life based on saving and investing when everyone around you exhibits a life based on spending and debt, and demonstrates their purchasing power everyday through their flashy cars, daily restaurant dining, and so forth. Trying to mimic this behavior will be quite costly, and very addictive. Leo Tolstoy described this type of situation perfectly in his book Anna Karenina - when the character Levin, who was never in debt and always saved money, found himself surrounded by persons that spent much money on all sorts of goods and services, and soon found himself doing the same, whether he could afford to or not, as this quote describes: "There are no conditions to which a man cannot get accustomed, especially if he sees that everyone around him lives in the same way." This is a timeless condition and threat to your wealth: just consider that Tolstoy's book containing this quote was written in 1877 in Russia. Some things never change, and the desire to spend and consume first, and worry about saving later, is just human nature, and something that you will have to, and can, overcome by following advice to constrain spending and save money.

Why worry about accumulating wealth when you make enough income to support your desired standard of living, and, why reduce your standard of living in order to save and invest more? Well, consider the following:

• Income can go away quickly - your job, no matter how "safe" you feel in it, may not be here in the future. Your business may encounter massive overseas competition, or technology may render your current service obsolete. Another possibility none of us wants to consider is that we may no longer be able to perform our job due to illness or injury or even age.
• Reduced Stress: think about how less stress you would have in your everyday life if you knew you could quit that job you hate so much, knowing you could afford to live without any wage income for 6 months, 12 months, or more without additional income.
  
• Income tends to make you do things you otherwise wouldn't do - like taking a less-than exciting job, just because you have to, because you need the cash-flow to feed your expense-habits, and because you have no savings to fall back on and no income from investments to offset any loss of wages. Start reducing your expenses now, and attempt to save as much as possible. I always have considered savings / wealth a tool that gives you the power to say "I Quit" when you should; and, oh how good it would feel to know that if a situation is intolerable, you can simply leave. And, even more so, perhaps you'll soon find out that with the ability to "Quit" on your terms if necessary, you become more bold and take more chances, and end up securing more responsibility and more income in your career because the fear of job-loss does not constantly weigh you down.
  
• I also see income-dependence, and lack of savings (i.e., wealth) as why most people will not even consider starting their own business for (justifiable) fear that they will not be able to instantly replace their existing income. Starting a business requires proper capitalization so you can get up and running. Starting your own business is a risk, but keep in mind that employers would not pay you what they do (in general) unless your value to them is more than what they pay you. So, if you can find a way to capitalize on your skills directly, you may find the risk returns equal rewards; but, it will likely take time to become established, and time requires savings to cover your expenses (side note: for this reason, I highly recommend starting a "side business" while employed full time in order to gain business experience and get a footing, or jump-start, prior to quitting your job -- it should reduce the savings required to make the leap to self-employment should you choose this route).
  

Saving, and wealth-building, is a long-term-plan approach to living; and a marked difference from an earn-and-spend approach to living. It takes commitment, and progress is slow. But, progress will also be noticeable within a few years when you start seeing noteworthy income being produced from the money you have saved and invested. And, you will feel a sense of accomplishment as your efforts progress. Worst case: you save, save, save, and feel no different -- well, at least you will have a chunk of money to spend on something when you cave in and return to the spending-path :)